The Right Tool For The Job: FinTech’s Millennial Problem
Growing-up in 1990’s America, I, like many other children received some well-intentioned advice from my parents on the importance of maintaining a balanced checkbook, paying my bills on time, and avoiding debt. Though, with those lessons came a heap of extra baggage including the idea that credit cards are evil- put on this earth to enslave us with debt for the rest of our natural lives. Or, the idea that $50k+ in student loan debt from a private liberal arts college wasn’t a big deal because the degree you get all but guarantees you a well-paying career. At the time, my 10 year-old self felt this advice didn’t feel relevant, and even if I had heard it, it was mostly obsolete by the time I really needed it. Years later I found myself, on my own, short on funds and short on the knowledge I needed to maintain a budget in my 21st century life.
Searching For The Answers
When I was 24, I had student loan debt, nearly maxed-out credit cards, and no semblance of a budget. With no insight into where my money was going, I was slowly choking to death. I found myself always worried that I wouldn’t have enough money the next month to do essential things like pay my rent and eat- I’d reached a breaking point.
All of this drove me to reluctantly seek out help from friends and family. I wanted to understand how they made it work. After several conversations, I found that many of them didn’t really have a solid plan either. One person (who shall remain nameless) recommend that I meet with a certified financial planner (CFP). So I did.
Welcome to my personal Hell.
Let’s just say, my meeting with this CFP only left me feeling violated and angry. Being as determined as I was, I met with a couple others yielding similar results.
With a growing sense of urgency, I tried a number of popular software “FinTech” budgeting and saving start-ups’ solutions like Mint.com, YNAB, and Acorns. While they all did one or a few parts of what I was looking for well, none of them fully solved the problem that I had and/or they were overly opinionated about how I spent my money and lived my life. Call me entitled, arrogant, whatever (I realize that I may be in the minority here) but I don’t respond well to pushiness or hard rules especially when I don’t agree with the premise of why one budgeting or savings methodology is better than the next.
What I really wanted was a solution that gave me insight into how I spend- acknowledging my personal needs, life plans, and lifestyle, all- the-while making the process of maintaining and sustaining a budget not suck. Oh, and something that wouldn’t make me feel like a worthless piece of garbage if I had the occasional budgetary “discretion”. But Instead, help me find a way to make it work while still informing me of the impact my unplanned spendings had on my budget. This solution would ultimately allow me to reach my goals, optimize my spend, and get to a place where I had more money in savings or available to invest. I still hadn’t found what I was looking for, so I decided to do some research and come up with my own solution.
10 Things I Realized
After a few months of looking at the available help that was out there, talking to several people, and reading other’s research, I came to a couple key realizations:
Millennials value experiences over possessions.
Millennials budget more than Baby Boomers.
Most budgeting solutions focus on the past, asking “How did you spend your money last month?” instead of focusing on your current cash flow and anticipated spending.
There is an emphasis on long-term investments, but not a lot of help in getting to the point where you can have money to invest.
Most personal finance solutions and many (admittedly not all) CFP’s are very opinionated. Not taking into consideration exceptions to the rule i.e. your value system, life goals, etc. when making their recommendations.
Until the US Department of Labor’s proposed rule change takes effect, which requires all personal retirement advisors to be fiduciaries, you have no guarantee (unless otherwise stated) that they have your best interest in mind when recommending investment and retirement products. Meaning you could be getting biased advice.
Modern payment methods like debit and credit cards make it difficult for the average person to keep track of spending.
Credit cards are a necessary evil. Because credit makes the world go round and without good credit, life is just harder. So we should learn to use it responsibly.
Credit cards can be a valuable tool when it comes to budgeting and cashflow.
Millennials know they need to be saving for the future, but they don’t, because “reasons.”
A Better Way
From a product perspective budgeting and personal finance solutions suffer from major UX deficiencies. They are built on assumptions that are not wrong, but rather out-dated. Research showed that the majority of Americans (about 68%) don’t budget, let alone actively use one of the many budgeting/savings products available. These products and solutions were made for people “of a certain vintage”. Not for Millennials who have different values and priorities for their lives and are increasingly becoming the largest segment of active consumers.
The bar has been set by companies like Apple and Google in regards to design and usability. There is now an expectation within this prized demographic that all products don’t just function, but instead function with little user effort in an optimized way.
A bit of conjecture: for these consumers (myself included), good product design and frictionless UX are now minimum cost of entries into the market. If a product doesn’t wow me, make my life easier, and if it requires that I spend a lot of extra time using it with little to no immediate payoff, I, and those like me, won’t use it.
It’s A Design Problem
I consider myself a pretty aware person. Although, my findings proved eye-opening- giving me a new perspective on all things personal finance. All of my insecurities about my own personal finance shortcomings gave way to a sense of urgency and concern for society.
There must be a better way.
Rather than fight the reality of “kids nowadays,” a solution is needed that both makes budgeting and long-term wealth management palatable and sustainable for the average person, namely the average millennial. Finance expert I am not, but I am a product designer, borderline millennial, and a father to daughter who’s future I worry about. Our ability to be “good stewards” of our money as a society can make a huge impact on our future.
The Fintech space is becoming very crowded and there may or maynot be room for yet another app, but I am determined to do something that just might make that process easier. Something bigger than “just an app.” Stay tuned, there’s more to come.